SMM Zinc Market Daily Review (2013-6-18)

SHANGHAI, Jun. 19 (SMM) - SHFE 1309 zinc contract prices opened RMB 10/mt lower at RMB 14,565/mt as LME zinc prices overnight dropped after Asian trading. SHFE copper and aluminum prices plunged by 1.33% and 1.26% respectively, and both SHFE and LME zinc prices soared before falling, distressing market sentiment, and causing longs to close positions. In this context, SHFE zinc prices found support at RMB 14,500/mt, and finally closed at RMB 14,515/mt, down RMB 60/mt or 0.41%.

Trading volumes of SHFE 1309 zinc contracts increased by 2,006 lots, to 26,264 lots, and positions decreased by 1,324 lots to 119,174 lots. Trading volumes of SHFE 1310 zinc contracts increased by 11,682 lots, to 73,100 lots, and total positions decreased by 2,774 lots to 305,452 lots.

#0 zinc prices were between RMB 14,650-14,680/mt, with spot premiums between RMB 90-110/mt against SHFE 1309 zinc contract prices. #1 zinc prices were between RMB 14,630/mt. Imported #0 zinc prices were around RMB 14,640/mt. Cargo holders were actively moving goods to generate cash as SHFE zinc prices inched down, but downstream buying interest weakened, keeping transactions quiet. With the exception of the Shuangyan brand, goods supply was tight, with the price spread with Shuangyan brand narrowing to RMB 10-20/mt. Imported zinc in Guangdong province squeezed market shares of domestic zinc, while downstream demand was also sluggish, with prices of Qilin brand between RMB 14,540-14,570/mt, and with the price spread with Shuangyan around RMB 100/mt. SHFE zinc prices continued to fall in the afternoon, with #0 zinc prices between RMB 14,630-14,660/mt, and transactions muted.